LAGUNA NIGUEL — As part of a debt reduction plan, Furon Co. said Wednesday it will sell its 45% interest in NTN-Rulon for about $16.5 million.
Laguna Niguel-based Furon, which makes polymer products, said it will sell the interest to its partner, NTN Corp., a major bearing manufacturer based in Osaka. NTN now owns the other 55% of NTN-Rulon, a maker of plastic bearings with annual sales of about $50 million.
"We will use the proceeds to pay down our debt, which is one of our long-term goals," said Furon Chairman Peter Churm. He added that NTN-Rulon will become a wholly owned subsidiary of the Japanese company, which likes to control production and sales of its businesses.
Furon's long-term debt stood at $153 million and its net worth was about $57 million in March, 1989, after it acquired three companies from Bundy Corp., including NTN-Rulon's parent, Dixon Industries Corp. Furon said the sale of its interest in NTN-Rulon will lower its long-term debt to about $62 million and put its net worth at more than $97 million.
"We are way ahead of schedule on our debt-reduction campaign," Churm said.
Despite the dissolution of the joint venture, Furon and NTN have agreed to continue buying each other's products and materials. They've also agreed to continue the technical exchange that started in 1973 between NTN and Dixon.
"We were able to strike a mutually acceptable deal," said Furon President Michael Hagan. "The good news is that the business will continue as before."
Since the subsidiary is run by NTN and its employees, none of Furon's 3,000 employees in the United States will be affected by this transaction, he added. Furon has about 450 employees in Orange County.
Hagan said NTN executives initiated the talks earlier this year to buy Furon's interest, but serious negotiations did not begin until last month.
The move is part of NTN's plan to expand its U.S. presence. Last year, it formed NTN Driveshaft Inc. to manufacture constant-velocity joints for Japanese auto-makers in the United States. The 105-acre property in Columbus, Ind., which will serve as its U.S. production base, will be operational in 1991.